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News   April 5, 2024   by Adam Malik

Why changing demographics may make nearshoring challenging

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A North American automotive aftermarket supplier looking to bring manufacturing closer to home, say to Mexico, may only be able to enjoy the benefits of the move for so long.

Amid all the talk about nearshoring and friend-shoring, concerns are being flagged about whether the feat may be achievable given the changing demographics of many countries.

Paul McCarthy, president of the MEMA Aftermarket Suppliers Association, noted that of the 38 wealthy countries part of the Organisation for Economic Co-operation and Development, 37 of them have a birth rate below replacement level. Countries looking to take on greater manufacturing capacity may be challenged by finding talent to fill roles.

Instead, he suggested to attendees of this year’s MEMA Aftermarket Suppliers Global Summit in Florida, suppliers need to pay attention to the population changes taking place in different pockets of the world.

McCarthy pointed out that half of India’s population is currently under the age of 25. In 2050, one-quarter of the world’s population will be in Africa. Furthermore, 35 per cent of the global workforce of those aged 15-24 will be in Africa.

McCarthy also noted that South and East Asia are tops for young people entering the workforce now. But come 2050, Africa will be No. 1. That signals a change ahead in terms of where supply chains will be operating. The continent will have the workforce to support the supply chain as talent dwindles elsewhere.

“So do you think as we look forward to this, and your boards and CEOs, it’s going to be important to be an international aftermarket company?” he said. “It certainly is on both ends of both demand and supply and people and capability.”

So it’s time to think about change. As scary as it seems, the work needs to be put in to reap the rewards.

“But in a market economy change is also good change is a source of profits in a market economy,” McCarthy pointed out. “And competitive advantage is determined by your ability to adapt to change.”

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